What are the key elements of a good business plan layout?

To get your business plan right, you'll need to include some key elements in your business plan layout. Each of these elements need careful analysis, planning and preparation. Let's take a look at each...

The Introduction

The introduction consists of the following:

• Cover page
• Confidentiality agreement

Your cover page is self-explanatory - it's what the reader first sees, like a book cover. But you do know how the saying goes...don't judge a book by its cover! Nonetheless, your business plan cover should look professional and entice your reader to open and read on.

You should also include a confidentiality or non-disclosure agreement (NDA) in the introduction of your plan. This is good practice to ensure your reader signs and agrees not to disclose the information and intelligence within, and this protects you.

Moving on to...

The Table of Contents

There isn't much need to describe the purpose of the table of contents. Regardless to say you'll need one for your business plan!

The Executive Summary

The executive summary is arguably the most important section within the business plan layout. The executive summary highlights the key points of your plan. In fact, if you don't get this part right, your readers won't look past it.

Your executive summary is going to sell your plan and your business. So you're going to want to include important points such as projected sales and profits, profitability and keys to success.

You will want to include as well, graphs and charts which give the reader a view of sales, margins and profits projected over three years. This lets them gain a snapshot of your business. You may also add growth rates, strengths and competitive advantages, depending on who you are selling your business plan to.

If you're selling your plan to potential investors, lenders, or suppliers, then the executive summary is the most pivotal element of the business plan layout. No doubt, the effectiveness of your executive summary is going to determine the success of your plan.

If your intention is to make a business plan for internal purposes, the executive summary will be just that - a summary of your plan.

Either way, it's a good idea to save writing your executive summary for last - after all, it will showcase the main points of your plan, and you'll need the rest of the plan completed to do that.

The Company Summary

Now it's time to get into the details!

The company summary comes right after the executive summary in the business plan layout. It's where you specify the structure of your company - whether it's a sole proprietorship, partnership, corporation or other type of entity such as a LLC.

This is also the place to explain your start-up position, start-up costs and start-up strategy, if you're writing a business plan for a new business.

The Market Analysis

Naturally, you need to identify and understand your target market. It doesn't matter if your plan is going to serve only as a critical tool for implementing your strategy, or if its main purpose is to acquire financing.

How well you know your market and the needs of buyers who fit the characteristics of your target market is going to have a big impact on the rest of your plan and the success of your business.

So this is the section of the plan in which you demonstrate your knowledge of potential buyers of your product or service - the size of market, demographics, income, etc.

Marketing and Sales Strategy

How you intend to promote your business, product or service to the market and convert that into sales is going to be presented in this part of the business plan layout.

Your marketing and sales plan shows how your business will connect to buyers. For obvious reasons, the reader is going to pay close attention to this section because it's in this section that you'll find your action plan and business milestones.

It's also where you'll present your sales forecast in detail.

The Management Plan

Clearly, who you hire to manage and operate your business is going to determine how well you implement your business plan. If your management team is weak or inexperienced, you risk wasting precious time, money and resources, not to mention opportunity.

Investors and lenders alike will be paying close attention to this section to see what kind of experience and skills your management team brings to the business. It's their way of gauging the chance of success based on past results of the people you will entrust your business growth to.

It's also your way of ensuring your human resource needs have been carefully thought out and planned.

Now this next section of the business plan layout is my favorite - show me the money!

The Financial Plan

Don't be surprised if those who read your business plan skip to this section of the plan - I've seen it happen many times!

Don't lose sight that this is the section of the business plan layout that gets into the nitty-gritty of your financials. Here's what it should include:

• Start-up Funding - if your business is a new one
• Important Assumptions - essential for informing how you arrive at your calculations
• Break-even Analysis - the sales level needed to cover both fixed and variable costs, crucial for measuring the risk a company has
• Projected Profit and Loss - a forecast of revenue and expenses, gross margins, and key budget items
• Projected Cash Flow - a forecast of cash inflows and outflows, arguably the most important financial statement alongside the profit and loss statement. The cash flow statement lets us know whether your business has a consistently positive cash balance and is able to pay for expenses. Profits alone will not ensure the success of your business. Positive cash balance is the key to staying solvent.
• Projected Balance Sheet - shows the net worth of your business. Ideally, the numbers should increase, and hence so should the net worth, over time.
• Business Ratios - these are standard ratios used to determine the feasibility and strength of a business, and are important to the decision-making of investors, lenders and shareholders, as well as management.

And there you have the standard business plan layout. Depending on the purpose of your plan and who your audience is, you may need to add more sections, or even elaborate more within the sections mentioned.

You'll definitely need to have an appendix providing more detailed financial statements, information, etc.